City on hook for $10-million damage costs in Vancouver aquifer breach

The City of Vancouver will try to collect on a repair bill of at least $9.9 million after un-permitted drilling on a city residential lot caused a massive aquifer flood that has yet to be contained, and has endangered neighbouring multimillion-dollar homes.

In September 2015, Feng Lin Liu, owner of 7084 Beechwood, was building a mansion on his $3-million vacant lot. A contractor who was hired “on a handshake” to build Liu’s home hired an inexperienced team of drillers to install a geothermal heating system, according to the city. The drillers — also hired on a handshake — pierced the aquifer, unleashing torrents that have been gushing about two million litres of water a day. The accident sparked an evacuation order and fears that a sinkhole could swallow about 12 nearby homes.

The drillers quickly fled the construction site and left Canada, according to the city. Liu is now responsible for the damage, deputy city manager Paul Mochrie told Postmedia News last week.

By March end, the city had paid $7.9 million to stop the underground flood, Mochrie said. The city hopes that B.C. Groundwater, the company contracted to cap the aquifer and shore up shaky ground, will finish the task by midsummer, leaving the city with an estimated bill of $9.9 million.

But the city has repeatedly underestimated the difficulty and cost of the operation. In September 2015, a city staffer wrote, “total costs may go to $200,000 … (and) it sounds like the homeowner is taking some steps to manage things.” Last August, the city estimated it could take another month to stop the flooding and finish repair work under 7084 Beechwood.

“It is the first time in B.C. anyone has had to deal with a flooding aquifer in a dense urban area,” Mochrie explained. “Even for the contractor, it has been very difficult to ascertain.”

Thierry Carriou of B.C. Groundwater said the firm is now trying to pour concrete and plug the breach, and he is “confident” of a 70-per-cent chance the task will succeed.

Nearly two million litres of water spill each day from an accidental breach of an aquifer at a house under construction at 7084 Beechwood St. in Vancouver.Jason Payne, Png /
Vancouver Sun

“There is always risk until the well is fully empty, but the risk has been reduced,” Carriou said.

When the city’s final bill is paid, efforts to recoup costs in B.C. courts could prove as messy and challenging as plugging the aquifer.

The city has declared the drilling accident at Liu’s Beechwood lot a nuisance. Mochrie said under the order, since Liu didn’t “remedy” damage for the un-permitted drilling work, the city took over and paid for repairs. The city has since applied unpaid taxes against the property, he said.

Property-tax documents indicate about $2 million in tax has been levied, so far.

“That tax needs to be paid by anyone who owns the property,” Mochrie said. Mochrie said that could include CIBC, the bank that provided Liu with a mortgage for the property. CIBC is now foreclosing on Liu’s Beechwood property, legal filings show, and a number of contractors have also placed builder’s liens against the property.

In January, Liu stopped making his mortgage payments, and CIBC is now owed $1.67 million on Liu’s $1.75-million loan, B.C. Supreme Court foreclosure filings say. CIBC has had difficulty locating and serving Liu with legal notices, according to recent court filings.

In late April, a B.C. Supreme Court order permitted CIBC to send Liu notice-of-foreclosure proceedings to the mailing address of a $3.7-million, 5600-block Elizabeth Street home. Mortgage documents for the Beechwood property say that Liu is a businessman, and that his home address is a $5.5-million, 2600-block Edgar Crescent home.

The value of Liu’s Beechwood property was assessed at $3.06 million in 2016. But an updated 2017 assessment has reduced the value to $2.09 million, which means the city’s mounting repair costs will far exceed the property’s value.

Mochrie said the final tax bill against the Beechwood property could be increased.

“Our legal team will be exploring every legal avenue, including if there are other assets the city could seek and claim (from Liu),” Mochrie said. “In order to collect, we will be looking to find him.”

Mochrie said the B.C. government — which has jurisdiction over underground water regulations — has committed to pay $1 million of the city’s un-recovered aquifer repair bill.

The two homes adjacent to the Beechwood lot remain evacuated. They were valued at a combined $9.3 million last year. The surrounding 10 properties, which were put on evacuation alert, were valued at a combined $50 million in 2016. Impact on the real estate market immediately surrounding 7084 Beechwood remains an unanswered question while work to repair the aquifer continues.

“We have no indication there is further risk to these properties,” Mochrie said.

In August 2016, Postmedia attended Liu’s listed home address in the 2600-block Edgar Crescent in Arbutus Ridge, an affluent Vancouver neighbourhood to the north of Beechwood. A middle-aged man answered the door, but said his English wasn’t very good. When asked if he was Liu, the man indicated he didn’t understand the question. When shown Liu’s name and street address, the man repeatedly said, “No.”

A few kilometres south of Edgar Crescent is the Kerrisdale home of Libo Sun. City documents obtained through a freedom of information request list Sun as the contractor at the Beechwood property.

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